Distribution cycles and concepts
Standard distribution cycles and frequency
MCPS makes distributions monthly for most recorded media royalties but not all
licensees or licensing schemes are included in all distributions. Most are distributed
within two months of the end of a quarter or one month after a receipt of royalties by
MCPS. Pro-rata distributions are made annually.
Royalties for other types of usage such as broadcasting are normally distributed four
times a year, in April, July, October and December. In most cases, the distribution
occurs one quarter after the end of the quarterly performance period. The distribution
cycles for the primary broadcast revenue sources are shown below:
For television (except music TV channels):
Jan
Feb
Mar
Apr
July Distribution
May
Jun
Jul
Aug
Sep
Dec
Distribution
Oct Distribution
Oct
Nov
Dec
April Distribution
For music TV channels and radio:
Jan
Feb
Mar
Apr
July Distribution
May
Oct Distribution
Jun
Jul
Aug
Sep
Dec Distribution
Oct
Nov
Dec
April Distribution
Distribution information for other revenue sources is shown in the appendix, under the
heading ‘Standard distribution cycle’. The December and April TV distributions are
referred to as quarterly distributions even though they span two and four months
respectively.
Distribution basis
MCPS bases distributions on the following methods, in order of preference:
Line by line - This is the preferred basis for all distribution sections. Every invoiced
work on every invoiced line is processed with revenue allocated and individually
identified on statements.
Unfortunately it is not always feasible for MCPS to distribute on a line by line basis, due
to the nature and volume of music usage by some licensees. Usually, this is where no
cost effective solution for collecting and processing data is available, for example, for low
value, limited manufacture.
Sample - Where line by line distribution is not feasible or cost effective, MCPS might
seek to use a sample of actual usage as the basis to distribute total revenue. This
method is often effected by the use of a value threshold, for example in some instances
only processing items worth a total of at least £5.
Pro-rata - A pro-rata based payment is used where other methods are not feasible or
cost effective. This is usually because sufficient data is not readily available. Effectively
this uses other data processed by MCPS. Pro-rata distribution is sometimes referred to
as ‘on the back of’. For example, ‘on the back of previously distributed music use’ or ‘on
the back of a similar licensee’. For example, money received from a small juke-box
supplier which provides no usage data may be distributed across usage data provided by
a larger juke-box supplier.
In some instances, combinations of these approaches may be used.
Source types
A source type is a pool of revenues that have been collected from one or more licensees
and distributed together because they are related in some way. A distribution may
contain many individual source types which are identified separately on distribution
statements.
The current list of source types can be seen in the appendix.
Interest on investments
MCPS puts royalties and other non-licence revenues awaiting distribution into an
account, the interest of which goes towards offsetting running costs.
Commission rates
MCPS charges commission on the revenue it collects to cover its operating costs incurred
in the normal course of business.
Commission is deducted at the point of distribution. Commission rates vary by source as
some sources cost more to operate than others.
Changes to commission rates require the approval of the MCPS board and members are
given not less than six months’ notice before they take effect. The commission rates are
reviewed regularly and current rates are listed in the appendix.
Weightings
Weightings are sometimes used to ensure that revenues for certain TV broadcast music
usages are valued correctly.
Time of day weighting
All TV broadcast usage is subject to time of day weightings to reflect the likely size of the
audience for each usage. These weightings dictate that one minute of music broadcast
during primetime hours is worth twice as much as one minute broadcast outside of
primetime. Primetime hours are deemed to be 6pm to 11pm.
Productions which straddle the border between primetime and non-primetime are
classified on the basis of the time slot into which their mid-point falls. For example, all
music used in a one hour long production whose broadcast commenced at 5.45pm would
be paid at the primetime rate as the production’s mid-point, 6.15pm, falls within the
defined primetime slot.
Library music weighting
Library (or production) music works are paid out at three times the rate of other works
in MCPS TV broadcast distributions. This is an acknowledgement that MCPS controls
three rights in respect of these works but only one right for other works:
 For most works, MCPS only controls the right to make a recorded copy of the
musical work. For library (or production) music works, MCPS controls two
additional rights:
o the right to make a copy of the original sound recording of the musical
works
o the right to broadcast the sound recording
For radio broadcasts of library works only the first usage on each station gets the 3
times weighting. For all other uses only a 1 times weighting is used to reward the
broadcast of the sound recording.
No other weightings are used.
Usage Weighted Usages (UWUs)
When MCPS agrees a blanket licence fee there is not necessarily a pre-defined value per
usage set in the licence; it is a lump sum. As such, there is no pre-set value to base the
distribution of each usage on. This means the value per usage needs to be calculated.
MCPS does this by applying usage weightings to each second of music use. These are
known as Usage Weighted Usages (UWUs). UWUs represent a different value depending
on the amount of music used on the broadcast channel and the revenue available for
distribution. For example, on any channel a one minute usage of a commercial track will
be worth 60 UWUs whereas a one minute usage of a library (or production) music work
will be worth 180 UWUs (60 seconds multiplied by the library music weighting of three).
At each distribution, the total UWUs for each work are added up within each channel.
Works of the same type that have more usages therefore accumulate more UWUs.
The available revenue for the channel is divided by the total number of UWUs to be
distributed to create a monetary value for each UWU. Each UWU within a distribution
section will have the same value. Therefore works that have accumulated more UWUs
will receive more money.
Example:
Work A has two broadcasts of three minutes so receives 2x180 seconds=360 UWUs
Work B has one broadcast of three minutes so receives 1x180 seconds=180 UWUs
Work C has 20 broadcasts of 30 seconds so receives 20x30 seconds=600 UWUs
The revenue for the channel is divided by its total UWUs. For the purpose of this
example, each UWU is worth £0.50.
Work A receives 360x£0.50 = £180
Work B receives 180x£0.50 = £90
Work C receives 600x£0.50=£300
Note that if Work C was a library work its UWU would have been up weighted by a factor
of three giving it 1,800 UWUs, worth £900 (1,800x£0.50).
UWU values are calculated per channel per distribution, based on the available revenue
for inclusion divided by the total UWUs of all the usages being distributed. For example,
a section with £10,000 available for distribution and a total of 20,000 UWUs would give a
value of £0.50 per UWU. This value is used to credit each work at the distribution, so a
work with 10 UWUs on this channel would receive 10 times £0.50 = £10.
Music use often fluctuates throughout the year, causing the UWU value to fluctuate too.
For example:
Period
Q1
Q2
Q3
Q4
Total £
£1,000
£1,000
£1,000
£1,000
Total
UWUs
500
450
575
525
UWU
Value
£2.00
£2.22
£1.74
£1.90
Click here for a history of the recent UWU values used by MCPS.
The reality is usually more complicated. When an FPV is set for the first distribution in a
licence period, the year’s music use is not known. Predicting final usage incorrectly at
the first distribution is an inherent risk. The wrong forecast could mean that more
revenue is distributed than actually collected. To minimise the risk of over distribution,
MCPS cautiously under forecasts the distributable value by a notional 10%. Any residual
revenues left over after the last standard distribution for a licensed period are distributed
via a reconciliation payment.
Reconciliation payments
MCPS aims to distribute all broadcasting revenues collected in a licence year, covering
usage falling within the licence period1, in the final quarterly distribution. Where this is
not possible, the next available distribution is used.
If sufficient residual revenue remains after MCPS has made all distributions for the
licence period covered by a specific fee per section, it will be distributed as a
reconciliation payment usually in the month after the final quarterly distribution.
This payment pro-rates the residual revenue across all members featuring in the original
distributions in proportion to the value generated by their usages.
Example:
The distribution section for Licensee A, a music TV broadcaster, has net distributable
revenue of £1,000, covering all 2010 music usage.
Initial distributions for the usages logged in the 2010 period are made in July 2010 for
quarter one usages, October 2010 for quarter two usages, December 2010 for quarter
three usages and April 2011 for quarter four usages. These initial distributions total
£900, leaving residual distributable revenue of £100.
1
There are two exceptions to this:
a. Commercial radio: The commercial radio licence year runs from October to September, so the final
performance period in any given licence year is July to September, paid in the December distribution. Due
to the time constraints associated with the December distribution, it is not possible to include the
reconciliation within the final payment. Constraints on MCPS systems are such that this reconciliation
takes place in May.
b. Reserved revenue in respect of missing data: The only other scenario in which revenues are not
reconciled at this distribution is where substantial gaps in performance data have been identified. In this
case, revenue is only reconciled when outstanding data is received.
Member A initially earned £100 of the original £900, or 11 percent. Then, upon
reconciliation, Member A will receive an additional reconciliation payment of £11, which
is 11 percent of the £100 residual revenue. Therefore, Member A will receive £111 in
total.
Where the residual revenue is insufficient to warrant reconciliation across the original
usage, it is carried forward to the next year’s distribution pool for that section.
Music consumption
For distribution purposes, music consumption is a measure of audience hours containing
music which is used predominantly in TV or radio broadcast revenue apportionment
calculations. It is usually calculated at station level by multiplying total audience hours
by music percentage, which is total music hours divided by total broadcast hours.
This provides a consistent and meaningful basis to compare different online services, TV
and radio stations for a single licensee, and the relative importance and value of music
within that licensee’s usage.
Licence values
The exact values of some licences can vary significantly from year to year. In some
instances the licence details, including the licence fee, are contractually confidential
between MCPS and the licensee. Because of this, no licence total values are given in this
document.
Interest on late distributions
MCPS pays interest to its members in two circumstances. First, it does so where through
its own neglect or fault it fails to distribute on time. Secondly, it pays interest where it is
itself paid interest by a user (unless this is part of an audit recovery). This is only in
relation to any period after the date when distribution would normally have been made.
Recognition and application of publishing contracts
When making most distributions MCPS applies officially documented contracts applicable
at the mid-point of the previous quarter to generate the payable owner e.g.:
Publisher gains
control of works
July 2013
Sept 2013
First
Distribution
affected
Dec 2013
April 2014
Usage period
covered by dist
July - Sept 2013
Oct-Dec 2014
Online - transactional (i.e. IMPEL) and some others do not follow this pattern. The
payable owner is generated at point of invoicing, normally close after the sale period and
then paid at a subsequent distribution (once the money has been received.)
2.18 Infringements, disputes and counter claims
Although these are not strictly distribution policy matters it is worth noting that MCPS
has formal procedures for dealing with infringements, disputes and counter claims.
Details of the infringements policy can be found here:
http://www.prsformusic.com/creators/memberresources/how_it_works/infringementsan
ddisputes/Pages/infringements.aspx
Details of the disputes and counter claims policy can be found here:
http://www.prsformusic.com/creators/memberresources/how_it_works/disputesanddupli
cateclaims/Pages/disputesandduplicateclaims.aspx